When looking for an entry-level job in finance, one of the biggest hurdles to clear is the interview. Finance is a high-paced, stress-inducing industry, and an interviewer may want to test if you can handle the heat in an interview. Knowing how to handle the different types of questions in advance can be a huge advantage.
Obvious questions, such "Where do you see yourself in five years?" and "What's your biggest weakness?" can be a part of any interview and have been covered in depth in many places. Instead, this article will focus on the finance-specific questions that an entry-level candidate can expect to face. (For more on interviewing, check out Taking The Lead In The Interview Dance.)
1. Straight Finance Questions
There is a saying, "Don't sweat the small stuff." But in a finance interview, the small stuff is a big deal. Entry-level candidates do not necessarily have a track record of having a true passion for finance. This may seem silly, but interviewers want to know that candidates actually have a devotion to, and true interest in, the industry. One way of testing this is to ask questions about current financial market conditions, recent big company news, current interest rates, etc. (For more tips on getting that first finance job, read How To Land A Finance Job Straight Out Of Undergrad.)
The best way to be prepared for this is to read financial publications like The Wall Street Journal and Financial Times, and check financial websites daily. An interviewer may ask what financial news you read or ask you to talk about a recent news story that interested you.
Know the general financial news and the news specifically impacting the area where you are interviewing. Be prepared for questions about the current interest rates on the benchmark treasuries, where the federal funds target rate is and what the Federal Reserve did at the last meeting, not to mention the current levels of the major stock market indexes, such as the Dow Jones Industrial Average. (Check out our tutorial section to brush up on financial concepts.)
Also be prepared for the more theoretical questions pertaining to your desired position. If you are interviewing for a job in fixed-income investing, an interviewer can ask you to explain the concepts behind duration. What will inflation do to bond prices and/or stock prices? Make sure that you know the major concepts and models in finance and that you can explain them in a coherent and intelligent manner. (For more information on finding the right finance job for you, read Finding Your Place In The Financial Industry.)
Another type of question favored by finance interviewers is the brainteaser. These are questions that will shock you with the appearance that they have absolutely nothing to do with finance. However, finance is an extremely analytical profession, and these questions are good tests of analytical ability. There are various questions you could be asked, so don't study answers for brainteasers. Learning how to approach them is the real key.
Let's look at a couple of examples:
- An interviewer might say, "Look at the clock. If the time were 3:15, what would the angle be between the minute hand and the hour hand?"
This question is an example of the fact that you need to think things through. Take your time, and don't feel you need to spit back an answer in one second. The first instinct of many is to say the answer to this would be zero, since it seems that both the hour and minute hand would be on the 3. This is incorrect. The hour hand moves one quarter of the way from 3 to 4, as the minute hand moves one quarter of the way around the clock from 12 to 3.
All it takes is a few simple calculations to arrive at the right answer. There are 360 degrees on the face of the clock, and 12 numbers, so there are 30 degrees between any two numbers on the clock. Since the minute hand is on the 3, the hour hand has moved 1/4 x 30 degrees away, which is 7.5 degrees.
- Another possibility is a challenging math question. An interviewer could ask something like, "What is 99 squared?"
A question like this may seem like a difficult one even to work though with a pen and pad. But if you get a question like this, try to put it in simpler terms. Actually trying to calculate 99 squared in your head is somewhat difficult and might take awhile.
However, an easier way to calculate it is to alter the question a bit. 99 x 99 is the same as (100 x 99) – 99. 100 multiplied by 99 is 9900; take away 99 and you arrive at the answer: 9801. With this method, 99 squared becomes a question you can do in your head in a few seconds. You can apply a method like this to many math questions. Just think things through, and put the question in simpler terms.
Guesstimates are another style of question that interviewers use to try to unnerve you and test your analytical abilities. These questions are complete oddballs, and as with brainteasers, the possibilities for different types of questions are pretty endless, so being able to approach them correctly is the main hurdle. Let's look at an example:
- An interviewer could ask, "How many refrigerators are in the United States?" The first key to questions like these is to realize you are not expected to give a correct answer, but instead display the way you analyze situations. And the worst thing you could do is spit back "200 million" immediately as a complete guess, since these questions are testing how your mind works.
Start out with the fact that there are around 300 million people in the United States. Make assumptions about the average size of a family and how many refrigerators an average family might have (maybe 1.5, since some families have more than one). Make assumptions about the number of people living alone that will likely have just one fridge. Ask if the interviewer is including commercial refrigerators for business, and if so, make assumptions about the number of businesses that use refrigerators, such as restaurants.
Use numbers that will be round and easy to calculate. The assumptions will be crude and inaccurate, but will demonstrate that you can take many factors into account when performing analysis. Take your time, write down these assumptions and calculations and come up with an answer. Remember: the answer is not nearly as import as the method you use to get to the answer. Being able to work through questions like these with a pen and pad and outlining your steps to the interviewer will be impressive and get you one step closer to the job.
Interviewers may try to stress you out during the interview process, but try to go into the room calm and with a clear head. Remember to prepare well, be up to date on financial news, and know the cornerstones of finance. Show off your analytical skills - a rapid-fire response probably will not cut it. Take time to think about your answers, and give the interviewer a chance to witness how you think. Highlighting your analytical skills and ability to think things through can help set you apart in your interview, which will improve your chances of getting the job you want.
Finding a company that's a good fit is just as important as landing a job, so read Trying On Potential Employers for tips on finding a position that's a great match.